News Update

Indian Port Bill 2021 will enable optimal management of coastline: MoSJ&K politicos meet PM; say Modi Govt is keen to restore statehoodIndia successfully test-fires 1000 km subsonic cruise N-capable missileI-T raids in Raipur unearth Rs 6 Crores illicit cashWorld Bank lends USD 32 Mn for bolstering healthcare in MizoramApple HomePod merits classification under SH 8517 6290 of the CTA, 1975: AARIncome tax raids 4 premises of hawala operator in Raipur; Cash worth Rs 6 crore seizedMukesh Ambani says Jio to use Google Cloud for 5G services + Rs 75K Crore investment in clean energyGST - Rule 108(3) of Rules, 2017 - Requirement of submission of certified copy of order appealed within one week - Interests of justice ought not to be constrained by a hyper-technical view - Appellate authority to adopt a liberal approach: HCGST - Section 107(4) of CGST Act, 2017 does not preclude the appellate authority from condoning a delay of a longer period: HCBrazilian SC admits lower court judge was biased against ex-President LulaST - Non-cooperation and absence of truthfulness - Settlement of disputes can never be claimed as a matter of right - CCESC was not in error in sending matter back to the adjudicating authority: HCBRICS nations to hold R&D conclaves on healthcare, energy solutionsCOVID-19 - Lab-leak theory - Missing 'smoking gun' puts House of virologists on 'fire'!India attracted USD 6.24 bn FDI inflows in April monthCus - Service by indirect methods, such as publication and affixture must be only after service by direct means set out in s.153 have been attempted and established to have failed – no proof of having served SCN – principles of natural justice violated: HCPMI peaks to 59.2 for June month for EUI-T - Co-operative banks are primarily co-operative societies & so any interest/dividend earned from such co-operative banks would be eligible for deduction under section 80P(2)(d) : ITATTax Inspectors Without Borders Program launched in Bhutan; India partnersI-T - Disallowance of delayed deposit of contribution received by the employees' towards PF & ESI is not tenable where such contribution is made before due date of filing ITR: ITATI-T - Unless assessee offered income for taxation, TDS cannot be given credit: ITATI-T - Interest on unutilised grant has to be treated as part of grant itself and cannot be subjected to tax: ITATI-T - Simply because progress billing was more than stage of percentage of completion, the same in itself, is no basis to usurp consistent method of accounting followed by taxpayer: ITATBombay HC gets 4 Addl Judges & one for Kerala for two yearsGovt sets up 3-member task force on bureaucratic reforms - Mission Karmayogi; Former Infosys CEO Shibu Lal given taks with Govind Iyer and Pankaj Bansal of PeopleStrongGovt notifies Draft Cantonment Land Administration Rules for better management of land poolCOVID-19 - India reports 54K cases with marginally less than 1000 deaths in 24 hours + US, UK register rise in Delta variant cases + Global daily death count once again goes above 8000Anti-virus Software titan John McAfee commits suicide in jail after Spanish HC okays extradition to US on tax evasion charges involving cryptocurrency fraud caseUS embargoes import of solar products from Xinjiang province in China
 
Capital Good Policy Execution can make or mar or #Make In India

JUNE 03, 2016

By TIOL Edit Team

THE National Capital Goods Policy (NCGP), which was approved by the Union Cabinet on 25th May, offers complex mix of challenges and opportunities to both the Governments and the industry.

Capital goods sector comprises more than two dozen segments or industries that produce equipment for a wide range of manufacturing and service industries. The interests of all stakeholders in this vast sphere of economic activities are always varied and often conflicting.

Creating synergies between these sectors and convincing all stakeholders to look at long-term advantage of robust indigenous capital goods industry are herculean task. Here one has to factor in the need for seeking cooperation of States too, whose multiple taxes and flawed tendering for different projects hurt interest of capital goods sector.

NCGP would thus test Modi Government's policy implementation skills. It would examine its capability to build consensus among all stakeholders to provide a favourable ecosystem for growth and expansion of capital goods sector.

As put by the 103-page mega Policy, which is like a committee report, "The smooth implementation and effectiveness of the policy will require alignment and joint action of several ministries and departments and have implications on multiple stakeholders and user industries. To this end, a governance mechanism has been proposed in the form of inter-ministerial and inter-departmental committees at the highest level to ensure due consideration of the interests of all stakeholders. The committees will be tasked with driving coordinated action and monitoring the progress and effectiveness of policy on an annual basis."

This coordination strategy is highly unlikely to deliver desired outcomes. The Government should set up an empowered standing committee of secretaries, to resolve issues that would arise during the policy implementation.

The proposed panel should be delegated powers to address issues of inverted duty structure (IDS) that keep cropping up due to dynamic nature of globalized trade. IDS problem keeps getting accentuated due to signing of free trade agreements (FTAs) and other preferential trade pacts that Department of Commerce is always plugging for. The Government should put a freeze on signing of new FTAs and ensure that existing ones result in balanced trade, if not rise in exports to FTA countries.

NCGP rightly calls for formulation of a long term, stable and rationalized tax and duty structure. It has pitched for uniform Goods and Services Tax (GST) regime across all capital goods sub-sectors with import duty after set-off to ensure level playing field against imports. It also advocates parity of import duty structure with domestic duties, for example, equalize Countervailing Duty (CVD) and Excise duty; and Special Additional Duty (SAD) with Sales tax/ VAT or GST (as applicable).

Tariff Commission has done several in-depth valuable studies on competitiveness of capital goods, which don't find any mention in NCGP. It is thus difficult to know whether the Government has factored in the findings and recommendations of such studies, commissioned by different ministries, while preparing the Policy.

Some studies deserve specific mention to understand why capital goods industry has been on the decline since the reform. The studies include: Import of second hand machinery and their impact on domestic manufacturers of capital goods and their competitiveness; Impact Assessment of FTAs/ PTAs on Capital Goods; Input Cost Study on Sub-Sectors of Capital Goods; Competitiveness of Indian Manufacturers Vs. Chinese Manufacturers in respect of Capital Goods and Impact of Liberalization/Tariff Reduction on HMT and other Public Sector Enterprises.

A missing link in the Policy is the need for facilitation of growth of engineering, procurement and construction (EPC) business at home and abroad. EPC or turnkey companies serve as channels for supply of diverse capital goods to project developers.

The Government must thus strive for imaginative policy stimulus for strong bonding between capital goods, EPC and consultancy businesses.

Projects exports and deemed exports are two other areas that should be monitored and managed well to enhance export of capital goods.

The Government should set time-lines for implementation of numerous recommendations contained in NCGP.

NCGP, if implemented whole-heartedly and methodically, can serve as bulwark for renaissance of manufacturing, which has been clinically weakened under the garb of economic reforms since mid-1991.

The Policy provides for increase production of capital goods from Rs.2,30,000 crore in 2014-15 to Rs.7,50,000 crore in 2025. It calls for and raising direct and indirect employment from the current 8.4 million to 30 million. It also envisages increasing exports from the current 27 percent to 40 percent of production.


POST YOUR COMMENTS